I
117th CONGRESS
1st Session
H. R. 3766
IN THE HOUSE OF REPRESENTATIVES
June 8, 2021
Mrs. Hartzler (for herself and Mr. Cleaver) introduced the following bill; which was referred to the Committee on Agriculture
A BILL
To amend the Packers and Stockyards Act, 1921, to establish a cattle contract library, and for other purposes.
Short title
This Act may be cited as the Optimizing the Cattle Market Act of 2021
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Sense of Congress
It is the sense of the Congress that there is a need for expedited reauthorization of the Livestock Mandatory Reporting program of the Department of Agriculture, including formula base prices subject to the same reporting requirements as negotiated cash and the creation of a contract library.
Cattle contract library
In general
Title II of the Packers and Stockyards Act, 1921, is amended by inserting after section 223 (7 U.S.C. 198b) the following:
Cattle contracts
Definitions
In this subtitle:
Base price
The term base price
means the price paid for cattle delivered to a packer, before application of any premiums or discounts, expressed in dollars per hundred pounds of carcass weight.
Contract
In general
Subject to subparagraph (B), the term contract
means any agreement, written or oral, between a packer and a producer for the purchase of fed cattle for slaughter.
Exclusion
The term contract
does not include a contract for a negotiated purchase.
Fed cattle
The term fed cattle
means a steer or heifer that has been finished on a ration of roughage and feed concentrates, such as grains, protein meal, grass (forage), and other nutrient-rich feeds, prior to slaughter.
Formula marketing arrangement
The term formula marketing arrangement
means the advance commitment of cattle for slaughter—
by any means other than through a negotiated purchase, negotiated grid purchase, or forward contract; and
using a method for calculating price—
under which the price is determined at a future date;
the basis of which is a price established for a specified market, which may be based on any publicly reported price, including plant average price, regional price, downstream price, or some other mutually agreeable price source; and
that may include a grid or nongrid price.
Forward contract
The term forward contract
means—
an agreement for the purchase of fed cattle, executed in advance of slaughter, under which the base price is established by reference to—
prices quoted on the Chicago Mercantile Exchange; or
other comparable publicly available prices; or
any other contract for the purchase of fed cattle, executed in advance of slaughter, as determined by the Secretary.
Heifer
The term heifer
means a bovine female that has not given birth to a calf.
Negotiated grid purchase
The term negotiated grid purchase
means a purchase of fed cattle by a packer from a producer under which—
the buyer-seller interaction results in a negotiated base price, which may be adjusted by premiums and discounts; and
the cattle are scheduled for delivery to the packer not more than 14 days after the date on which the agreement for purchase is made.
Negotiated purchase
The term negotiated purchase
means a purchase of fed cattle (commonly known as a cash
or spot market
purchase) by a packer from a producer under which—
the buyer-seller interaction that results in the purchase and the agreement on the actual base price for the purchase occur on the same day; and
the cattle are scheduled for delivery to the packer not more than 30 days after the date on which the agreement for purchase is made.
Packer
The term packer
has the meaning given the term in section 221 of the Agricultural Marketing Act of 1946 (7 U.S.C. 1635d).
Producer
The term producer
means a person engaged in the business of selling cattle to a packer for slaughter.
Steer
The term steer
means a bovine male castrated before reaching sexual maturity.
Type of contract
In general
The term type of contract
means the classification of a contract for the purchase of cattle—
into 1 of the categories described in subparagraph (B); and
by determining the base price of the cattle.
Categories
The categories for classification of a type of contract are the following:
Formula marketing arrangement.
Forward contract.
Negotiated grid purchase contract.
Cattle contract library
In general
Subject to the availability of appropriations to carry out this section, the Secretary shall establish and maintain a library or catalog of each type of contract offered by packers to producers for the purchase of all or part of the production of the producers of fed cattle (including cattle that are purchased or committed for delivery), including any schedules of premiums or discounts associated with the contract.
Information collection
In general
To maintain the library or catalog established under subsection (a), the Secretary shall obtain information from each packer on each type of existing contract of the packer by requiring a filing or other form of information submission from each packer.
Contracted cattle numbers
Information that shall be submitted to the Secretary by a packer under paragraph (1) shall include, with respect to each existing contract of a packer—
the type of contract; and
a description of the provisions in the contract that provide for expansion in the numbers of fed cattle to be delivered under the contract for the 6-month and 12-month periods following the date of the contract.
Availability of information
In general
The Secretary shall make available to producers and other interested persons information on the types of contracts in the library or catalog established under subsection (a), including notice (on a real-time basis, if practicable) of the types of contracts that are being offered by packers to, and are open to acceptance by, producers for the purchase of fed cattle.
Monthly report
In general
Beginning 30 days after the library or catalog is established under subsection (a), the Secretary shall make the information obtained each month in the library or catalog available in a monthly report to producers and other interested persons.
Contents
The monthly report described in subparagraph (A) shall include—
an estimate by the Secretary of the total number of fed cattle committed under contracts for delivery to packers within the 6-month and 12-month periods following the date of the report, organized by reporting region and type of contract; and
an estimate by the Secretary of the total maximum number of fed cattle that may be delivered within the 6-month and 12-month periods following the date of the report, based on the provisions described in subsection (c)(2)(B) in existing contracts, organized by reporting region and type of contract.
Maintenance of library or catalog
Information in the library or catalog established under subsection (a) about types of contracts that are no longer offered or in use shall be removed from the library or catalog.
Educational outreach activities
The Secretary shall conduct educational outreach activities for producers on how best to use the cattle contract library or catalog established under subsection (a).
Confidentiality
The reporting requirements for packers under this section shall be subject to the confidentiality protections provided under section 251 of the Agricultural Marketing Act of 1946 (7 U.S.C. 1636).
Violations
It shall be unlawful and a violation of this Act for any packer to willfully fail or refuse—
to provide to the Secretary accurate information required under this section; or
to comply with any other requirement of this section.
Authorization of appropriations
There are authorized to be appropriated to the Secretary such sums as are necessary to carry out this section.
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Conforming amendment
Section 201 of the Packers and Stockyards Act, 1921 (7 U.S.C. 191), is amended by striking When used in this Act
and inserting Unless specified otherwise, in this Act,
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Cash market acquisition of cattle
Title II of the Packers and Stockyards Act, 1921 (7 U.S.C. 191 et seq.) (as amended by section 2), is amended by adding at the end the following:
Cash market acquisition of cattle
Definitions
In this subtitle:
Negotiated grid purchase
The term negotiated grid purchase
means a purchase of cattle by a packer from a producer under which—
the buyer-seller interaction results in a negotiated base price, which may be adjusted by premiums and discounts; and
the cattle are scheduled for delivery to the packer not more than 14 days after the date on which the agreement for purchase is made.
Negotiated purchase
The term negotiated purchase
means a purchase of cattle (commonly known as a cash
or spot market
purchase) by a packer from a producer under which—
the buyer-seller interaction that results in the purchase and the agreement on the actual base price for the purchase occur on the same day; and
the cattle are scheduled for delivery to the packer not more than 30 days after the date on which the agreement for purchase is made.
Packer
The term packer
—
has the meaning given the term in section 221 of the Agricultural Marketing Act of 1946 (7 U.S.C. 1635d); and
for calendar years beginning on or after January 1, 2022, includes only a federally-inspected cattle processing plant that slaughtered an average of 125,000 head of cattle per year during the immediately preceding 5 calendar years.
Producer
The term producer
means a person engaged in the business of selling cattle to a packer for slaughter.
Regional mandatory minimum
The term regional mandatory minimum
means, for each reporting region (as designated by the Agricultural Marketing Service), of the number of transactions and quantity of cattle purchased for slaughter by a packer in that region each slaughter week, the minimum number of such transactions and the minimum percentage of such cattle, respectively, that are required to be purchased through negotiated purchases or negotiated grid purchases from producers.
Slaughter week
The term slaughter week
has the meaning given the term current slaughter week
in section 212 of the Agricultural Marketing Act of 1946 (7 U.S.C. 1635a).
Regional mandatory minimums
In general
Not later than 2 years after the date of enactment of this subtitle, the Secretary, in consultation with the Chief Economist, shall establish—
regional mandatory minimums for the purpose of enhancing price discovery and transparency for cattle market participants; and
methods for establishing those regional mandatory minimums, which shall be publicly available.
Duration
Regional mandatory minimums established for each reporting region under subsection (a)(1)—
may be weekly or on another periodic basis, as determined by the Secretary;
shall account for improbable events with profound consequences (commonly referred to as black swan events
); and
shall be applicable for not more than a 24-month period.
Public input
In carrying out subsection (a), the Secretary shall make all proposed regional mandatory minimums and proposed methods for establishing those minimums subject to a notice and comment period.
Considerations
In carrying out subsection (a) for each reporting region, the Secretary, in consultation with the Chief Economist, shall consider the following factors:
The number of packers in the reporting region.
The availability of cattle in the reporting region.
Pre-existing contractual arrangements of packers in the reporting region.
The number of pricing transactions (pens of cattle sold) in the reporting region.
Land-Grant research
In carrying out subsection (a), the Secretary, in consultation with the Chief Economist, shall take into account relevant research conducted by land-grant colleges and universities (as defined in section 1404 of the National Agricultural Research, Extension, and Teaching Policy Act of 1977 (7 U.S.C. 3103)).
Biannual review
On establishing regional mandatory minimums under subsection (a)(1), the Secretary—
shall review the regional mandatory minimums not less frequently than once every 2 years; and
may, in consultation with the Chief Economist, modify the regional mandatory minimums after—
making the proposed modification subject to a notice and comment period; and
consulting with representatives of the United States cattle and beef industry.
Enforcement
On establishing regional mandatory minimums under subsection (a)(1), the Secretary shall—
regularly monitor compliance by packers with those regional mandatory minimums; and
enforce this section in accordance with section 203.
Cost-Benefit analysis
Not later than 3 years after establishing regional mandatory minimums under subsection (a)(1), the Secretary, in consultation with the Chief Economist, shall conduct a quantifiable, data-driven cost-benefit analysis regarding the operation and effect of those regional mandatory minimums.
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14-day cattle slaughter
Definition of cattle committed
Section 221(1) of the Agricultural Marketing Act of 1946 (7 U.S.C. 1635d(1)) is amended by striking 7-day
and inserting 14-day
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Mandatory reporting for live cattle
Section 222(c) of the Agricultural Marketing Act of 1946 (7 U.S.C. 1635e(c)) is amended—
in paragraph (1)—
by striking subparagraphs (B) and (C); and
by redesignating subparagraph (D) as subparagraph (B);
by redesignating paragraph (2) as paragraph (3); and
by inserting after paragraph (1) the following:
Prior day reporting
In general
The corporate officers or officially designated representatives of each packer processing plant shall report to the Secretary, for each business day of the packer processing plant, not later than 10:00 a.m. Central Time on each reporting day, the information from the prior business day described in subparagraph (B).
Information required
The information required under subparagraph (A) shall be, with respect to the prior business day, the number of cattle, organized by cattle type, scheduled for delivery to a packer processing plant for slaughter for each of the next 14 calendar days.
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